While the value of acquisitions abroad by UK companies rose to a three year high of £18.3 billion in the first quarter of 2011, the upsurge was tapered by the finding that purchases in the UK by UK companies fell to the second lowest value since the third quarter of 1992.

While the value of acquisitions abroad by UK companies rose to a three year high of £18.3 billion in the first quarter of 2011, the upsurge was tapered by the finding that purchases in the UK by UK companies fell to the second lowest value since the third quarter of 1992.

Findings from the Office of National Statistics revealed that in the first quarter of 2011, a total of 18 fewer acquisitions were made by UK companies overseas. However the drop in deal volume was countered by the rise in deal value, with high profile buys such as the acquisition of PolymerLatex by Yule Catto & Co FOR £376 million boosting the results.

Following on from a strong finish in the final quarter of 2010 for the domestic M&A market, the first quarter of 2011 saw a fall in both deal value and volume, with the largest domestic transaction being that of Biocompatibles International by BTG for £172 million.

Peter Watson, managing director at Prism Corporate Broking, comments: ‘UK companies continue to be active abroad and the number of overseas acquisitions has been increasing steadily since the low point at the beginning of 2009.’

Commenting on the fall in transactions but rise in values in the first quarter of 2011, Watson adds: ‘It’s possible a result of the clamour to complete deals before the calendar year.

In relation to levels being above 2009 results, Watson expects this trend to continue throughout the remainder of 2011 as companies invest in higher growth markets.

With incoming investment down on the final quarter of 2010, a fall from £7 billion to £6.4 billion, the volume of deals seen involving transaction in the UK by foreign companies dropped to levels recorded in the final quarter of 2009.

Watson adds: ‘I believe the relative strength of the Euro will continue to encourage European businesses to invest in the UK.

‘The report does not give the geographical split, and it is possible that the US activity has fallen as a result of the relatively fragile state of the US economy and dollar weakness.

One of the largest inward acquisitions in the first quarter of 2011 was the purchase of British Airways by BA Holdco, which was classified as such as it was part of the merger of British Airways and Iberia to create International Airlines Group.

Examining the a sector of speicalisation for Prism, Watson concludes: ‘In the ICT market we have seen continued acceleration in activity levels throughout 2011 with sentiment being most clearly expressed in the recent offer of over £230 million by Autonomy for the digital assets of Iron Mountain.’